Stock Market Today: Markets braced as Israel mulls Iran attack response

Iran's attack on Israel has markets on edge heading into a big week on Wall Street.

Apr 15, 2024 - 18:30

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Stock Market Today: Markets braced as Israel mulls Iran attack response

U.S. equity futures moved higher Monday, while oil prices slipped and the dollar gave back recent gains against its global peers, as investors looked to Israel's formal response to an unprecedented missile attack from Iran over the weekend.

Updated at 8:45 AM EDT

Shop and don't drop

Retail sales surged again last month, rising 0.9% to a collective total of $709.6 billion, topping Wall Street forecasts and adding further pressure to near-term Fed rate cut bets.

The closely-tracked control group number, which feeds into GDP calculations, was marked 1.1% higher and more than triple Street forecasts.

Stocks are holding gains, but Treasury yields are moving higher on the inflationary aspect of the report, with 10-year notes rising 4 basis points to 4.615% and 2-year notes pegged at 4.985%.

Consumer continues to spend: March Retail Sales .7% vs. .4% expectations with prior revised to .9% from .6%. Ex auto retail sales 1.1% vs .5% expectations. And importantly the control group 1.1% vs .4% expectations - as this goes into GDP figures.— Stephanie Link (@Stephanie_Link) April 15, 2024

Updated at 8:21 AM EDT

Goldman gets deal boost

Goldman Sachs (GS) share are a key early mover, with the Dow component rising 3.8% after posting stronger-than-expected first quarter earnings powered in part by a boost in global M&A activity.

Goldman's markets division saw revenues rise 15% from last year to $9.73 billion, with asset and wealth management revenues up 18% to $3.8 billion.

Stock Market Today

The dollar surged to a fresh five-month high against its global peers Sunday as investors scrambled for safe-haven assets and braced for a week of spiking market volatility amid concern about the prospect of a wider military conflict in the Middle East triggered by Tehran's attack.

Iran said the strike, its first-ever military action that directly targeted Israel's sovereign territory, was launched to retaliate for Israel's April 1 attack on a consular building within the Iranian embassy compound in Syria, which it said killed several high-ranking officials among Iran's Islamic Revolutionary Guards.

Israel, which has not claimed responsibility for the events in Damascus, has vowed to "extract a price from Iran ... when time is right for us" after saying it repelled around 99% of the 300 drones and missiles Tehran launched late Saturday evening.

"We will build a regional coalition and exact the price from Iran in the fashion and timing that is right for us," said Benny Gantz, a retired army general serving in the cabinet of Prime Minister Benjamin Netanyahu.

Iran, meanwhile, has said it will strike back if either the U.S. or Israel retaliates.

“The president has been very clear: We don’t seek escalated tensions in the region. We don’t seek a wider conflict,” White House national security spokesperson John Kirby told ABC's "This Week" program on Sunday. "I think the coming hours and days will tell us a lot.”

Nonetheless, that prospect, which began with Iran-backed Hamas crossing over from Gaza and killing and capturing 1,200 Israeli citizens on October 7, has the potential to rock global financial markets after a week of surging volatility tied to the repricing of Federal Reserve interest-rate-cut forecasts.

The S&P 500 ended 75 points, or 1.46%, lower on Friday, marking its biggest single-day decline since late January and a one-week decline of around 1.55%.

Investors will also navigate a busy week of corporate earnings, with 41 S&P 500 companies set to report over the next five days, as well as key readings on retail sales, housing starts and weekly jobless claims data.

Analysts see first-quarter earnings rising 2.7% from a year earlier to a share-weighted $447.3 billion, with second-quarter profits estimated to improve to $494.7 billion.

The Commerce Department will also publish March retail sales data at 8:30 a.m. U.S. Eastern Time, with economists looking for a modest easing from the $700.7 billion tally.

Early indications suggest markets are, for the moment, looking at a solid Monday open, with futures tied to the S&P 500 indicating a 22-point opening bell gain and those tied to the Dow Jones Industrial Average suggesting a 190 point advance.

The tech-focused Nasdaq, meanwhile, is priced for a 113 point gain despite premarket declines for heavyweights Tesla (TSLA) and Apple (AAPL) .

The U.S. dollar index, which tracks the greenback against a basket of six major currency peers, was marked 0.15% lower in early trading at 105.876. It had hit the highest since November 2 over the weekend, suggesting investors are setting up for a week of risk aversion as geopolitical tensions continue to simmer.

Gold, another safe-haven asset, was marked 1.2% higher in Sunday deal and changing hands at $2,371.73 per ounce.

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The market's key volatility gauge, the CBOE's VIX index, soared 14.55% in after-hours trading to a late October higher of $17.08. That suggests traders are expecting daily swings for the S&P 500 of around 54 points, or 1.07%, each day for the next month.

"A classic defensive playbook has gone into effect as participants reduce exposure and derisk ahead of the weekend, amid the potential for significant gapping risk at the Sunday market open," said Michael Brown, senior research strategist at London-based Pepperstone.

"It is only reasonable to expect stronger prices when trading resumes.

"Having said that, there has been no impact on production so far and Iran has said that 'the matter can be deemed concluded'.
--Tamas Varga, PVMhttps://t.co/AGwTYhp7at #energy #OOTT #oilandgas #WTI #CrudeOil… pic.twitter.com/hUQHJdv7eg— Art Berman (@aeberman12) April 14, 2024

Iran seized an Israeli-affiliated cargo ship, the MSC Aries, near the Strait of Hormuz on Saturday. The Aries, which flies a Portuguese flag, is part of the Zodiac shipping group owned by Israeli billionaire Eyal Ofer.

Global oil prices, which closed at $90.45 per barrel on Friday after extending their five-month gain to around 32%, were marked modestly lower in the early hours of trading, with Brent contracts for June delivering falling 52 cents to $89.93 per barrel.

WTI futures for May delivery, which are closely linked to U.S. domestic gasoline prices, slipped 71 cents to $85.09 per barrel.

"Crude prices already included a risk premium, and unless the market faces a real disruption to supply, the risk of an upside spike towards $100 remains limited," Saxo Bank strategists wrote Monday. "All eyes on Israel, and their response."

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